Wakilii

Damuco Investments Limited v Opportunity Bank (U) Limited (Civil Suit 589 of 2019)

High Court · [2024] UGCOMMC 334 · 2024 Judgment for Defendant AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of contract with counterclaim
Decision
Judgment entered for the Defendant/Counter-Claimant. Plaintiff/Counter-Defendant held liable for breach of contract and ordered to pay penalty fees, special damages, interest and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the Plaintiff breached both construction contracts by failing to complete works within the stipulated timelines as agreed in the Addendum dated 5 June 2018. The Defendant did not breach the contracts. Time was of the essence under the Addendum. The contract for ATM room construction was discharged by lapse of time. The Defendant was entitled to enforce the contractual penalty clause of 1% per day for late completion.

Outcome

Judgment entered for the Defendant/Counter-Claimant. Plaintiff/Counter-Defendant held liable for breach of contract and ordered to pay penalty fees, special damages, interest and costs

Facts

On 7 March 2018, the parties executed two contracts: one for construction of fifteen ATM rooms and one for painting the Defendant's branches. The ATM construction contract was varied by an Addendum dated 5 June 2018, which required completion within fifteen days and advanced UGX 35,000,000 to the Plaintiff. The Plaintiff failed to complete the works within the stipulated timeframe. The Defendant terminated the ATM construction contract on 23 July 2018 after the expiry of the agreed period. The Plaintiff received a total of UGX 63,528,813.91 as advance payment but only completed nine of fifteen ATM rooms to 87% completion. The Defendant engaged new contractors to complete the pending works. The Plaintiff claimed it faced hardships including delayed ATM machine delivery, lack of effective communication, absent construction permits, and increased material costs.

Issues

  1. Whether the Defendant breached the two construction contracts dated 7th March 2018 for construction of ATM rooms and painting of the Defendant's branches?
  2. Whether the Plaintiff/Counter defendant is liable on the counterclaim?
  3. What remedies are available to the parties?

Orders

  • The Defendant/Counter-Claimant did not breach the contracts dated 7th March 2018 for the construction of the ATM Rooms and painting of the Defendant's branches.
  • The Plaintiff/Counter-Defendant is liable to the Defendant/Counter-Claimant for breach of contract.
  • The Plaintiff/Counter-Defendant pays the Defendant/Counter-Claimant a sum of UGX 101,454,432 as a penalty fee.
  • The Plaintiff/Counter-Defendant pays the Defendant/Counter-Claimant a sum of UGX 6,209,604 as special damages.
  • The Plaintiff/Counter-Defendant pays the Defendant/Counter-Claimant simple interest at rate of 17% per annum on the special damages from the 25th June 2018 until payment in full.
  • The Defendant/Counter-Claimant is awarded costs of the suit.

Rules and key headnotes

Contract Law — Breach of Contract — Time of the Essence — Addendum
Where parties to a contract execute an addendum that specifies a revised completion period and makes time of the essence, failure to perform within that period constitutes breach of contract and justifies termination unless there is a lawful excuse.
Contract Law — Discharge by Lapse of Time
Where time is of the essence under a contract and the stipulated period expires, the contract is discharged by lapse of time and the parties are released from their obligations.
Contract Law — Penalty Clauses — Enforceability
Under Section 62(1) of the Contracts Act 2010, penalty clauses in contracts are enforceable, but what is prohibited is the innocent party receiving an amount exceeding the penalty stipulated. The party complaining of breach is entitled to receive reasonable compensation not exceeding the amount named or the penalty stipulated.
Contract Law — Breach of Contract — Burden of Proof
A party who alleges breach of contract must prove that the breach is attributable to the other party's failure to honour obligations specified in the contract. A party who is the cause of the breach or whose failure to perform obligations partly led to the breach cannot competently sustain a claim for breach of contract.
Civil Procedure — Defence — General Denials
Under Order 6 rule 8 of the Civil Procedure Rules, a defence based on general and evasive denials must be rejected. The defendant must deal specifically with every allegation of fact, stating whether it is admitted, denied, or not admitted. Every allegation of fact in the plaint will be taken to be admitted if not denied specifically or by necessary implication.
Contract Law — Special Damages — Proof
Special damages must be specifically pleaded and proved. Mere entering into or signing a contract does not indicate performance or incurring of expense in so far as a claim for special damages is concerned. The claimant must adduce evidence proving actual disbursement and particularizing what was spent.
Contract Law — Interest on Commercial Transactions
Under Section 26(2) of the Civil Procedure Act, the court has discretion to award interest at a rate it deems reasonable. Where money is held in a commercial transaction, the commercial lending rate rather than the court rate of 6% is appropriate to compensate the plaintiff for the defendant's use and benefit of the money.

Legislation cited (6)

Cases cited (11)

  • Kabaco (U) Ltd v Turyahikayo Bonny (High Court Civil Suit No. 14 of 2021)
  • Meridiana African Airlines (U) Ltd v Avma Spares (EA) Ltd (High Court Civil Suit No. 111 of 2017)
  • M and B Engineers Ltd v UNRA and another (Court of Appeal Civil Appeal No. 316 of 2021)
  • Charles Richards Ltd. Vs. Oppenheim [1950] ALL E.R 420
  • Cavendish Square Holding BY v Talal El Makdessi, and ParkingEye Ltd v Beavis [2015] UKSC 67
  • Scandinavian Trading Tanker Co AB Y Flota Petrolera Ecuatoriana (The "Scaptrade") [1983] 2 AC 694
  • Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd (Dunlop) [1915] AC 79
  • Deluxe Enterprises Ltd v Uganda Leasing Co Ltd (Court of Appeal Civil Appeal No. 13 of 2004)
  • Premchandra Shenoi & Anor v Maximov Oleg Petrovich (Supreme Court Civil Appeal No. 9 of 2003)
  • Sietco v Noble Builders (U) Ltd (Supreme Court Civil Appeal No. 31 of 1995)
  • Uganda Development Bank versus Muganga Construction Co. Ltd. [1981] HCB 35

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Damuco Investments Limited v Opportunity Bank (U) Limited (Civil Suit 589 of 2019) [2024] UGCommC 334 (12 November 2024)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.